India to de-risk Infrastructure Development

Syllabus: GS1/ Urbanization, GS2/ Government Policies & Interventions 

In News

• The triad of PM Gati Shakti, Project Monitoring Group (PMG) and public private partnerships (PPP) forms the backbone for accelerated infrastructure development .

About the infrastructure development 

• Traditional methods of infrastructure expenditure:  Traditionally, public capital expenditure on the creation of public utilities has had only a limited assessment of risks and financial returns.
  • The risk spectrum of infrastructure development is broad and spans political, administrative, regulatory and market-based adversities. 
• Changed approach: India is moving from sole reliance on public Capital expenditures to incorporating private investment for infrastructure development.
  • The Indian government has encouraged private and foreign investment through various promotional measures, such as:
    • A liberal FDI policy, 
    • Ease of Doing Business measures like a National Single Window System, fiscal incentives, etc.
    • The establishment of agencies like Invest India, among others. 
    • A range of investment de-risking measures have also been introduced, leveraging technology, an integrated approach in planning, rationalized risk-sharing mechanisms, etc.
• India’s triad of investment de-risking: The PM Gati Shakti National Master Plan, Project Monitoring Group and Public Private Partnerships form a triad of investment de-risking.

PM Gati Shakti National Master Plan

• Geographic Information System (GIS) platform: PM Gati Shakti seeks to revolutionize infrastructure development through a ‘whole of the government’ approach: a digital Geographic Information System (GIS)-based platform and an institutional arrangement. 
  • This initiative aims to develop plans for integrated multimodal infrastructure for the efficient transportation of goods and people.
• Data-driven decision-making: By bringing together various ministries and departments on a single digital platform, PM Gati Shakti enables data-driven decision-making for project planning and implementation. 
  • More than 38 ministries/departments of the central government, 28 states and eight Union territories are already part of it.
• Network Planning Group (NPG):
  • Planning stage: 
    • The traditional process of inter-ministerial consultation at the planning stage of projects has been substituted by a collaborative evaluation at the national level by a Network Planning Group (NPG) to foster synchronized decision-making and reduce administrative risk. Land acquisition risk, common in infrastructure development, is also minimized by using the planning tools available on the GIS platform.
  • Implementation stage: 
    • At the implementation stage, the project is subject to another de-risking mechanism in the form of the Project Monitoring Group, which also has an administrative set-up and digital dashboard. This operates as a special cell in the government’s Cabinet Secretariat.
• Multimodal connectivity: PM Gati Shakti also emphasizes multimodal connectivity to economic nodes and cargo hubs. 
  • This enhances the commercial viability of network projects as well as the infrastructure or manufacturing units connected to it. 
  • Implementation risk to the extent foreseen at the planning stage, is minimized through the PM Gati Shakti mechanism.

Project Monitoring Group

• The Project Monitoring Group takes up issues related to Central and state-level ministries/departments for quicker resolution. 
  • This includes clearances, permissions, land acquisition, grants of right-of-way/use, licensing or leasing needs, and forest and environmental clearances, apart from law-and-order and contractual issues, etc. 
• Thus far, this mechanism has resolved a multitude of issues related to various projects, both public and private. 

Public Private Partnerships

• The PPP model is another mechanism for an equitable and rational distribution of risks and rewards between public authorities and private partners. 
• Over the past three decades, PPP in India has evolved from being merely an extra budgetary resource for project financing to a robust tool, attracting private capital along with state-of-the-art technologies and best practices in infrastructure development. 
  • After 1991, this mechanism led to the infusion of private capital amounting to about ₹68 trillion with over 9,200 infrastructure projects. 
• The last decade has clocked an almost equal number of projects, worth about 40% of the total PPP investment so far.
•  This growth is significant and can be attributed to de-risking measures.

Way ahead

• Intensifying these measures is likely to boost investor confidence and attract further investments, laying the foundation for a more efficient and resilient logistics ecosystem, a sine qua non for the greater integration of India’s economy with global value chains. 
• India’s joining a global club of the 10 most efficient logistics ecosystems would be incidental to it.